Time to invest in Israel's economy

SORIYA DANIELS SPECIAL TO THE JEWISH BULLETIN

There is no shortage of journalistic accounts when it comes to the human toll of the second intifada. We are familiar with the Jewish lives it has claimed, we can extrapolate its effect on travel to Israel, and we may even recount a couple of cancelled overseas student programs. But this is not the only toll. Behind these scenes, Israel's economy was hit hard and only recently has it steadily begun to rebound from the turmoil within the country's borders and from the ripple effect overseas.

There are myriad ways, big and small, in which North Americans can help bolster Israel's economy, while simultaneously deriving personal benefit. Possibilities abound – from buying Israeli products to investing in Israeli funds or Israel bonds, from participating in a Partnership 2000 initiative to buying real estate at an all-time low (and predicted to be on the rise), from visiting Israel and supporting its shops and restaurants to enhancing exports. The Bulletin spoke at length with Zohar Peri, the government of Israel's economic minister to North America, and to Meir Nitzan, head of the Jewish Agency for North America, to demystify what exactly we can do to lend a hand during Israel's time of need.

Three factors have adversely impacted Israel's economy, according to Peri. They include reduced exports, the plummet of the high-tech sector and the second intifada. Adding insult to injury, real estate investments are significantly down, as well. "If the general atmosphere is not good, then people invest less in real estate," Peri explained, stressing that there is less money circulating to go toward equipment and the labor costs involved in building.

Not only has Peri not despaired, but he noted that, "In every community, there are, no doubt, business people who are part of economic activity, either working for an organization or investing or spending money." He stressed that this can be done with Israel, and benefit both parties. "Today, there are so many possibilities to help by simply trying to see if there are good business arrangements one could do in Israel or with Israel. It could be 'normal' business activities such as buying goods or investing in funds or in industry. People could invest in venture capital funds or in industrial funds in Israel," Peri added, alluding to Israel's favorable investment conditions. He made special mention of Israel bonds, which are known for their stability.

Peri provided encouraging news: "The numbers are going up in every sector." For instance, in 2000, Israel realized $3.9 billion just from tourism alone, but by the close of 2003, that figure dropped to $1.9 million, with $5.2 billion lost over the three and a half years since the second intifada began. But the numbers are picking up in 2004. According to Israel's Economic Mission, the decrease in violence in the region has led to an increase in visitors to Israel. Peri points out that many delegations are coming to the country, such as high school students from around the United States, and everything is going well. He encourages North Americans to visit Israel: "It is not so risky, as you might deem. We invite you to visit."

It is not only the tourism sector that is rebounding. The proof is in the pudding or, in this case, in the numbers. Total foreign investment jumped one billion dollars between 2002 and 2003, and direct foreign investment more than doubled, and continues to rise, according to economic reports released by the Economic Mission to North America. Exports of goods and services have also climbed, and the shekel remains strong due to heavy investment in the Israeli stock exchange.

"From our contacts with the rating companies in New York and Europe, we learned that the policies [Finance Minister Benjamin] Netanyahu will be making to restructure the economy [have] already garnered a lot of support all over the world." Central to Israel's economy are exports in the high-tech sector, namely, in the fields of telecommunications, life sciences and software. As an export-driven economy, Israel has been particularly affected over the last two years by the decreased demand for goods and services in the United States, Canada and Europe, particularly in high-technology.

Israeli products are plentiful, and not just in Jewish supermarkets. Tired of mowing your lawn? Leave it to Robomower, a self-guiding, automatic, battery-powered lawn mower developed by Israel's Friendly Robotics. Next time you leave a voicemail message, think of Israel: Comverse Technology, whose main operations are in Tel-Aviv, is the world's largest producer of voice-messaging systems. Israel ranked sixth in the world in the number of patents issued per million inhabitants, according to the World Economic Forum's Global Competitiveness Report, and ranks third after the United States and Hong Kong in entrepreneurial activity, according to the IMD World Competitiveness Yearbook.

Simply put, the brainpower and ingenuity of Israel's citizens render the country a great place to invest. Thousands of high-tech start-ups are launched in Israel every year, providing investment opportunities for venture capital firms and other investors. Israel's position at the forefront of leading-edge technology is based on its highly educated population, the superb high-tech training provided by the Israel Defence Forces and the fact that Israel boasts the world's greatest per capita number of engineers, scientists and doctors. Israel has a thriving life sciences sector and Israeli scientists are pioneering important new drugs, treatments and medical devices that are being used worldwide. One such example is the multiple sclerosis drug Copaxone, which was developed at the Weizmann Institute and is made by Petach Tikva-based Teva Pharmaceuticals, the largest generic drug maker in the world. And for those who take to heart the biblical commandment, "Be fruitful and multiply," Sheba Medical Centre at Tel Hashomer discovered Pergonal, the world's most widely used fertility drug.

For businesspeople seeking information on the entire range of issues impacting trade and investment with Israel, the government of Israel's Economic Mission to North America, headquartered in New York City, is a central source of information. The mission provides a direct link between Israel's business sector and the North American business community. They will also assist in locating importers and exporters of Israeli products for local businesses. The mission has regional offices in Los Angeles, Chicago, Atlanta and Toronto.

Supporting Israel's economy doesn't end here. The Twin-Cities initiative, also known as Partnership 2000, links particular North American Jewish federations with Israeli cities, as well as North American individuals wishing to mentor an Israeli venture in a given town. New York is partnered with Jerusalem, Los Angeles with Tel-Aviv, Vancouver with Kiryat Shmona and Toronto with Eilat. Some cities, such as Ashdod, are still up for grabs by a North American city.

North Americans involved with this project help foster economic development in a city or town in Israel, either by providing consultancy or participating in an exchange (such as with teachers and students). The Jewish federation typically provides the seed money, though some Israeli cities have their own funding, said Nitzan of the Jewish Agency.

"It's up to a joint steering committee between the region in Israel and the federation within the community to decide on which projects they are to be involved in during a specific year," explained Nitzan. Groups of Israelis typically come to North America to meet with North American businesspeople to help develop cities and towns in Israel.

Nitzan considers Cleveland, Ohio, a model Jewish community in this endeavor. There, lay persons and professionals have come together to promote both the municipality of Beit She'an, as well as the surrounding rural areas. "Clevelanders are very much involved. In the past, they have provided seed money and ideas for a joint industrial area in the region, including nearby kibbutzim," said Nitzan. "They have been very successful at developing the kibbutzim." According to Nitzan, their community foundation was based on the model in Cleveland. He added that there is a group of businesspeople from Cleveland, who, together with a group of Israelis, are promoting the northern city of Akko economically and socially, and establishing various internships in Akko.

Nitzan stressed that, while all of the big North American cities have a partnership in place, they can each use hands-on expertise. He encouraged anyone wanting to pitch in to either call their local federation (604-257-5100) or to e-mail him directly at [email protected]. "It's a co-ordinated effort," said Nitzan, "enabling people to be involved with this project on either an individual basis, a federation basis or on an organizational basis."

Soriya Daniels is a freelance writer living in Florida.

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